Check your construction cover This year has seen rapidly escalating costs and a shortage of labour. Mark Wilby, commercial executive, looks at how current trading conditions are affecting insurance policies in the construction sector, and what businesses should be checking.
Material costs are increasing
Types of construction
Design and Construct Professional Indemnity
It is well known that the costs of materials have been rising at a rapid pace. While this has implications for many aspects of new construction projects, it also means that the costs of property rebuilding have risen commensurately. We recommend that you check property rebuild costs to ensure they remain adequate for existing structures, and also check contract values for new build works to ensure contracted ‘all risks’ values remain.
The concerns around cladding are well documented and insurers will require full disclosure. The increasing concerns around existing structures that contain external cladding or external wall insulation mean your insurer will require additional information if this applies to you. Failure to disclose will likely invalidate your policy in the event of a claim. It sounds obvious, but it’s vital to ensure your business description is accurate and fully describes all your business activities on every project. This will need to extend to include the types of properties being worked on and their methods of construction. Please ensure you check your insurance documents, paying particular attention to any exclusions that may restrict the types of properties you are covered to work on, and any restrictions relating to the types of construction method used. Insurers are increasingly looking to reduce their exposure, especially relating to timber-framed new- build sites, so check and review your existing arrangements to ensure you are correctly covered.
The current market conditions have led to Professional Indemnity insurance becoming a very challenging policy to negotiate. Early engagement with your broker is vital to ensure that terms are obtained competitively and with established insurers. Certain trades are being hit with dramatic rate increases and significant exclusions which may have a serious impact on your business. Most notable exclusions relate to fire exposure. Those in the cladding industry and the fire protection industry should be well aware of these exclusions by now, but we are also finding these being applied to most trades involved in the construction industry. It is absolutely vital your broker fully understands your business, in particular to any past, present or future contracts which may involve any cladding or fire protection exposure and how any exclusions would impact your cover to ensure you are protected against any design exposure your business could be liable for.
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